Department of Finance
Reference: Assignment of the City of Brighton’s 2023 Private Activity Bond Allocation
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Catrina Asher, Director of Finance
Date Prepared: August 1, 2023
PURPOSE
To propose assignment of Brighton’s 2023 Private Activity Bond allocation to the Aurora Housing Authority in support of the Weatherstone Apartment Project.
BACKGROUND
Each year, cities throughout the State of Colorado receive an allocation of Private Activity Bonds which are tax-exempt bonds offering low-cost financing for private projects that serve a public purpose. Examples of eligible projects include acquisition, construction or rehabilitation of housing for low- and moderate-income individuals and families, mortgage loans or mortgage credit certificates for income-qualified, first-time home buyers. While Private Activity Bonds can fund projects other than housing, they are primarily directed towards housing projects because there are other financing options that are better suited for non-housing projects.
The City of Brighton has a 2023 allocation of $2,481,938 in Private Activity Bonds.
In order to utilize the bonding capacity, a government authority would partner with a private organization to finance a project. Private Activity Bonds are issued by a government authority and the bond proceeds are used to create a low-interest loan for the project. The project manager pays back the loan and the investors get repaid with interest. The organization issuing the bonds and coordinating the project is typically a housing authority or the Colorado Housing Finance Authority (CHFA).
It is always the priority of staff to work towards directing funding to projects within the City of Brighton, and in recent years, Private Activity Bonds have been allocated to the Hughes Station rehabilitation project located within the City. This bonding capacity is highly restricted and time constrained and for 2023, there were no requests for projects located within the City. When this happens, we then prioritize use of the funds for regional projects. This was done by contacting Adams County’s program coordinator to identify other projects that may be a good candidate for this bonding capacity, which is how the Weatherstone Apartment Complex project was identified. The project capacity and details will be outlined for City Council at the Study Session on July 25, 2023.
If Council is supportive of assigning the City’s Private Activity Bond allocation to this project, this would be accomplished through a resolution assigning the bonds to the Aurora Housing Authority in support of the project.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Council has the option to assign the bonding capacity to Aurora for use on this project. Council also has the option to not assign bonds to any specific project. In that case, the bonding capacity would revert to the State to be used on statewide projects at the State’s discretion.
FINANCIAL IMPACT
There are no financial implications for the City as the bonds would be issued and managed by the Aurora Housing Authority who will work directly with the project developer. The City's role is strictly to decide whether the City would like the bonds allocated to this project.
STAFF RECOMMENDATION
Staff recommends approving a resolution which authorizes assigning Brighton’s 2023 Private Activity Bond allocation to the Aurora Housing Authority in support of the Weatherstone Apartments Project.
Attachments:
Ø Resolution
Ø Colorado DOLA Private Activity Bond Allocations - 2023